Adobe Photoshop is hands down, the most popular program for creating and modifying images for the web.
This is true not only because Photoshop is available on a wide array of platforms ranging from Mac to Windows to UNIX, but because after four generations of development, Adobe Photoshop has the most intuitive user interface, the most complete set of tools, and the largest number of reference books around.
In fact, as Deke McClelland says in Photoshop 3 Bible, “Some estimates say that Photoshop sales exceed those of all of its competitors combined.”
One thing to keep in mind about using Photoshop however, is that since Photoshop is so powerful, it requires a fairly souped up working environment. And also Photoshop can be rather expensive to get the latest and greatest version.
Specifically, it would be a good idea to have at least 32MB of RAM. After all, as a web designer, you will be tasking your system while developing. Often you will have two browsers, Photoshop, an HTML editor, a word processor, and two or three ftp/telnet sessions open all at one time. Without enough resources, your computer will not be able to keep up with you.
This is from http://www.extropia.com